A strange morphology...

...from Bear to Bull.

http://www.morganstanley.com/GEFdata/digests/latest-digest.html

Stephen Roach has been among the most bearish commentators regarding U.S. markets during the past few years. He has, of course, been completely wrong (which is nothing to be ashamed about given the ephemeral nature of the captial markets.), but the fact that he is now covinced that it is smooth running ahead is about as good a sell indicator as one might get. I continue to subsribe to the "there will be a major correction in June/July/August camp.

I completely disagree with his dollar stance. Yes, the dollar has weakened somewhat. But there are only two currencies in the world that approach the depth and liquidity of the dollar. That would the the Yen and the Euro. If the dollar depreciates, these currencies will have to appreciate. Do you really thing that either of these countries wants their export-driven growth to be choked off by a strong currency?

No, of course not. The BOJ is a grandmaster at playing the currency angles and toasting traders who dare think that Japan has finally achieved the domestic-driven demand they need to sustain its recovery.

The Euro is less adept at playing the game, but Trichet will continue to keep rates low to ensure the engine room of Germany and France get moving again.